Identity, Parochial Institutions, and Occupational Choice: Linking the Past to the Present in the American Midwest

NBER Working Paper No. 13717Issued in January 2008NBER Program(s): CHDAELS

This paper documents the presence of non-economic career motivations in the U.S. labor market, explores reasons why such motivations could arise, and provides an explanation for why they might have persisted across many generations. The analysis links ethnic (migrant) labor market networks in the American Midwest when it was first being settled, the local identity or attachment to place that emerged endogenously to maintain the integrity of these networks, and occupational choice today. While fractionalization may adversely affect the performance of secular institutions, ethnic competition in the labor market could at the same time have strengthened within-group loyalty and parochial institutions. These values and their complementary institutions, notably the church, could have mutually reinforced each other over many overlapping generations, long after the networks themselves had ceased to be salient. Counties with greater ethnic fractionalization in 1860 are indeed associated with steadily increasing participation in select religious denominations historically dominated by the migrants all the way through the twentieth century. Complementing this result, individuals born in high fractionalization counties are significantly less likely to select into geographically mobile professional occupations and, hence, to migrate out of their county of birth, despite the fact that these counties are indistinguishable from low fractionalization counties in terms of local public good provision and economic activity today.